HANOI — Vietnam’s economy grew 8.02% in 2022, the fastest annual pace since 1997, backed by strong domestic retail sales and exports, but is facing headwinds from a global slowdown.
The reading is higher than an official growth target of 6.0%-6.5% and last year’s growth of just 2.58%, when COVID-19 lockdowns left a dent on the economy and impacted factory activity.
The high annual growth number comes despite fears of a global recession and its impact on demand for exports from Vietnam, a key manufacturer of goods like textiles, footwear and electronics for big-name international brands.
“The economic performance is worth noting amid global economic and political uncertainty and challenges,” the General Statistics Office (GSO) said in a report.
The industrial and construction sector in 2022 grew 7.78%, while the services sector expanded 9.99%, and the agricultural sector grew 3.36%, it said.
Exports in 2022 were up 10.6% to $371.85 billion, while retail sales rose 19.8%, the GSO said, while consumer prices in December rose 4.55% from a year earlier.
Though the economy in 2022 grew at the fastest pace in decades, economists warned it is facing headwinds ahead, with weakening global demand having already impacted its shipments.
“The slowdown in global economic growth is making it more difficult for Vietnam to boost its exports and attract more foreign investment next year,” said Can Van Luc, an advisor to the government and an economist at the Bank for Investment and Development of Vietnam.
Luc said upward inflation pressure is also building following an increase in money supply towards the end of 2022, adding that “Vietnam has to import a lot of goods whose prices are still high, thus also pushing up pressure for higher inflation.”
Exports in December fell 14% from a year earlier to $29.66 billion, while imports were down 8.1% to $29.16 billion. A decline in imports may indicate a future contraction in industrial production as firms cut their purchases of materials and equipment for production.
Gross domestic product (GDP) growth in the fourth quarter was 5.92%, slowing from a growth of 13.71% in the third quarter, the GSO said. Third quarter growth was revised up from 13.67%.
Foreign direct investment (FDI) into Vietnam, one of the country’s key economic drivers, rose 13.5% this year to $22.4 billion, according to the government. But FDI pledges, which indicates future inflows, dropped 11% in the year to $27.72 billion.
Vietnam is targeting GDP growth of 6.5% and inflation at 4.5% for next year. — Reuters